At the end of the financial year we have some quantity of finished stock. For valuation of finished stock excise duty is not added.
I know that on the finished stock provision for excise duty is to be made as liability arises as soon as the manufacuting is completed BUT payment is postponed to the date of delivery of stock to customer.
My question in this regard is :
1)What is the journal entry that needs to be passed on 31 March for making provison of excise duty?
2) Should the amount of debit entry suggested in above journal entry be added to the closing finished stock?
3)What is the journal entry to be passed in the next year to reverse the provision?
4)Should any disclosures be made in notes to accounts in above scenario?
I request the caclub member who are in manufacturing industry or have done audit of manufacturing industry to please answer my above questions.
Please answer questionwise. Thanks.
CAclubindia
